Industry Leading Manufacturers purchased equipment five years ago for $78,000. The company expects the equipment to have

Question:

Industry Leading Manufacturers purchased equipment five years ago for $78,000. The company expects the equipment to have a salvage value of $3,000 after an eight-year useful life. Assuming the company uses straight-line depreciation; calculate the gain or loss realized if the company sells the equipment after four years for

1. $ 42,050.

2. $ 39,875.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...